Just in time for Tax Day this year, the California State Auditor’s Office released a report on a number of the state’s corporate tax credits, deductions and exemptions known as “tax expenditures.”

The report examined six of the largest state tax expenditures, including the research and development credit; the minimum franchise exemption, which waives the $800 minimum franchise tax on corporations for their first year in business; the “water’s-edge” election, which excludes businesses’ foreign income from state taxes; the low-income housing credit; the film and television credit and the Subchapter S corporation election, which offers lower taxes to small-business corporations.

The Auditor’s Office criticized the state for failing to regularly review its tax expenditures to see that they are achieving their intended goals. For example, “Because no state entities oversee or regularly evaluate the R&D credit or the minimum franchise tax exemption, we found insufficient evidence to determine whether these tax expenditures are fulfilling their purpose,” the Auditor declared.

The Auditor also recommended implementing several best practices from other states, including clearly stating the Legislature’s policy objectives for each tax expenditure, adopting performance measures and implementing sunset provisions to require the Legislature to periodically evaluate and reauthorize the tax breaks. Those all seem to be sound, commonsense measures.

While we sympathize with the notion that we should support targeted tax breaks because we should take whatever tax relief we can get to spur job and economic growth, the more this special-interest lobbying is rewarded, the more time and money businesses will spend trying to buy favorable policies from legislators and the less they will invest in improving their businesses and serving their customers.

And while such tax breaks might benefit a certain industry, they unfairly tilt the playing field and put businesses in nonfavored industries at a disadvantage. Moreover, tax exemptions tend to have limited effects, because they often reward behavior that would have taken place with or without the tax breaks.

We favor an approach of broad-based tax reduction, coupled with the elimination of tax exemptions. A 2013 study by Reason Foundation and the Howard Jarvis Taxpayers Association estimated that, by eliminating the most “egregious” tax credits and exemptions, the state could lower its overall corporate tax rate by at least 20 percent. That would drop it from the eighth-highest rate in the nation to near the national median rate, which would benefit all businesses and improve the state’s pathetic business climate.